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rocwhite

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Credit Karma Tax: How to add an "Other Income" entry with negative amount
Any one knows how to add an "Other Income" entry with a negative amount? Currently it appears Credit Karma Tax doesn't support it, insisting "Other income amount must be greater than zero." However, this is necessary for taxable income exempt by tax treaty (IRS Publication 519 'U.S. Residency Under Tax Treaty “Tie-Breaker” Rule').

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I am having the same problem. 

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If you went into the negative, it is not considered "income" as there wasn't any. It would be considered a "loss". When it comes to taxes it may be best to pay someone that knows all the ropes of tax preparation.

Reply by
rocwhite

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Well, someone who knows taxes told me I need to do what I'm trying to do, and I confirm that on IRS's own publication:

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IRS publication 519, U.S. Residency Under Tax Treaty “Tie-Breaker” Rule:

"In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U.S. tax under the treaty. However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22."

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Instructions I obtained for this situation:

"For the 1042-S income, you would enter this on a W-2 or 1099 so it will transfer to the correct income line.

For the treaty, you can enter the description and enter the amount as a negative in the Other Income section. Go to the Federal Q&A, Other Income, and select Prizes, awards or other miscellaneous income."

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Reply by
rocwhite

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I also need to report the same income on a W-2 (positive value here so it will transfer to the correct line on 1040 and various credits can then be calculated correctly). The negative "Other Income" negates this effect so that my tax rate is also correct. I'm actually instructed by someone who knows all this, and I confirmed it on IRS's own publication:

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IRS publication 519, U.S. Residency Under Tax Treaty “Tie-Breaker” Rule:

"In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U.S. tax under the treaty. However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22."

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